It has been about a month since the last earnings report for PRA Group (PRAA - Free Report) . Shares have added about 4.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PRA Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PRA Group's Q1 Earnings Miss Estimates, Down Y/Y
PRA Group’s first-quarter 2019 earnings per share of 34 cents missed the Zacks Consensus Estimate by 5.6%. Moreover, the bottom line declined 27.7% year over year due to a rise in expenses.
The company’s total revenues were $246 million, up 10.3% from the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate by 3.8% on the back of higher finance receivables.
It witnessed cash collection of $461.2 million, 8% above the 2018's first-quarter level. This was driven by an increase in U.S. legal cash collections as well as a rise in U.S. call center and other cash collections.
Effective tax rate for the quarter under review was 18.6%.
Quarterly Operational Update
PRA Group’s fee income of $7 million increased 27.3% year over year.
The company’s finance receivables during the reported quarter grew 9% year over year to $238.8 million, primarily owing to Americas Core portfolio purchases made last year and the Europe Core portfolio purchases in fourth-quarter 2018.
Total operating expenses increased 12.6% year over year. This deterioration was due to higher legal collection costs and fees plus a rise in agency fees.
As of Mar 31, 2019, the company has total assets of $4.1 billion, up 5% from the level at 2018 end.
PRA Group exited the quarter with total equity of $1.1 billion, up 0.2 % from the level on Dec 31, 2018.
Cash and cash equivalents in the quarter under discussion were $102 million, up 3.5% from the figure as of 2018 end.
In the quarter under consideration, borrowings increased 4.6% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.34% due to these changes.
At this time, PRA Group has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, PRA Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.